In order for a small business to succeed, it is often necessary to find a hook, or niche that sets the business apart from similar commercial entities. For example, if you are one of three bakeries in a neighborhood, focusing your menu on low-fat or dairy-free pastries, can help you carve out an identity that sets you apart from your local competition. By creating your own identity, you stand a chance of creating a steady clientele that looks to you for their pastry fix first. In the small business world, building, and maintaining, a steady clientele is the key to stability and growth.
While creating a highly individualized business identity is vital to building your brand, it can sometimes make it difficult to discern whether your company is growing and expanding at an appropriate rate. It can also make it hard to understand whether the practices and systems by which your company functions, are the most efficient and effective. If there is no other business or product like yours, how do you make a comparison? How do you know whether you are on the right track? It is a tricky dilemma. Fortunately, there are a few ways that you can approach examining your company’s trajectory, even when your business model exists “outside of the box”.
Business benchmarking is a practice for comparing your company’s performance and practices to the best practices of related industries. It allows you to identify practices that are inefficient, employee habits that need to be changed, and areas where general management can be improved. Though the idea has been around for almost 30 years, it has only been implemented on a wide scale since the mid-90s. The steps for benchmarking are fairly straightforward, and can be carried out within your company, or in partnership with other businesses under the umbrella of a particular industry. The basic steps are as follows:
1. Pinpoint the Issue
Speak with management, employees, customers, and vendors about areas where work is bogged down or the system is faulty. Before beginning your comparative analysis, make certain that you are clear about how the current system or practice is carried out.
2. Find Related Companies or Practices
Research what other companies or industries have similar practices, or exist within a similar industry.
3. Choose the Top
From your group of related companies, identify those that are functioning successfully and optimally. Look at their financial planning, their process of economic modeling, and their level of overall employee satisfaction, as well at those parts of their business that are directly related to your problem.
4. Analyze the Company’s Practices
Through the use of surveys and questionnaires, analyze how these successful companies are handling the issues your small business may be facing.
5. Go on Site
If at all possible, spend time at the home office of a business that is functioning optimally. It is also beneficial to broker a benchmarking exchange with a related company. Each of you may have areas that can be improved through observation and analysis of a related business.
6. Make the Necessary Changes
Now that you have a clear idea of practices and systems that are effective, it’s time for you to make adjustments to your own small business. Take what you have learned and apply it effectively.
It is possible to become quite detailed and exacting with the benchmarking process, and a range of issues can be examined and addressed.